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[Foreign Language] Welcome to the TC Transcontinental Fourth Quarter and Fiscal 2020 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, December 10, 2020. I would now like to turn the conference over to Yan Lapointe, Director, Investor Relations. [Foreign Language]. Mr. Lapointe, please go ahead.
Thank you, Gabriel, and good afternoon, everyone. Welcome to TC Transcontinental's fourth quarter and fiscal year 2020 results conference call. The press release and the MD&A with complete financial statements and related notes were issued earlier today and are available on our website at tc.tc. A replay of this conference call will also be available on our website under our Investor Relations section.We have with us today our President and Chief Executive Officer, François Olivier; and our Chief Financial Officer, Donald LeCavalier.Before I turn the call over to management, I would like to specify that this conference call is intended for the financial community. [Operator Instructions] Please be reminded that some of the financial measures discussed over the course of this conference call are non-IFRS. You can refer to the MD&A for a complete definition and reconciliation of such measures to IFRS. In addition, this conference call might also contain forward-looking statements. These statements are based on the current expectations of management and information available as of today and they involve numerous risks and uncertainties, known and unknown. The risks, uncertainties and other factors that could influence actual results are described in the fiscal 2020 annual MD&A and in the latest annual information form.With that, I would now like to turn the call over to our President and CEO, François Olivier.
Thank you, Yan, and good afternoon, everyone. We delivered another excellent quarter, ending our fiscal 2020 with a strong performance in all of our businesses. More than half of the year was impacted by COVID-19, and I'm proud to say that with our resilience, agility and operational efficiency, not only did we pull through, but we are stronger than we were 1 year ago.How did we do that? First, we significantly improved the profitability of our Packaging Sector. Second, we demonstrated our ability to control our cost and print whatever the context. Third, we protected our free cash flow generation and significantly reduced our debt, keeping us in a solid financial position. Fourth, we launched a strategic plastic recycling business. And fifth, our Media Sector has a spectacular year it can build on.Let me review the highlights for the fourth quarter. We were very pleased with our packaging results. We continue to see sustained customer demand for food and consumer products driven in part by stay-at-home behavior. These products account for the majority of our portfolio and enabled us to offset the adverse effects of the pandemic and certain other markets. In terms of profitability, I mentioned last quarter the expected negative impact of resin pricing dynamics. Despite this impact, we recorded significantly higher profitability on a year-over-year basis thanks to our operational efficiencies, better-than-expected synergies and a favorable mix.I'm also proud to say that we delivered on our objectives in packaging for the full year. We evolved our portfolio to grow in markets where we have a strong competitive advantage. We grew our EBITDA by $20 million to $228 million, and this, in spite of selling our paper packaging business, USD 480 million, in January 2020. Organically, our EBITDA grew by 13%, quite an achievement. Our robust R&D project portfolio continues to be a major focus, and we are making significant investment in product development. Demand is growing for packaging that is recyclable, compostable or has recycled content. This position us well as our customers are increasingly turning to us as their sustainability partner. On that note, we recently announced a promising agreement with the Coca-Cola Company, which is using our newly launched shrink film, containing 30% of post-consumer recycled plastic. We are proud to support the Coca-Cola Company to make progress towards our shared sustainability objectives.We also continue to commercialize our [ compostable-lidded mother ] bag with major coffee brands across North America. Thanks to our Recycling Group, we continue to make headway in the circular economy for plastics by increasing our capabilities to provide a stable procurement of recycled resins. We are well positioned to benefit for the trends towards more sustainable products, a key component of our long-term growth in packaging. Our Printing Sector also had a very solid quarter, showing its resilience in spite of the pandemic. While we continue to see recovery in demand, we also further optimize our platform by reducing our overall costs. The gradual recovery of orders continue, albeit at a slower rate, and we now stand at around 80% to 85% of last year's volumes, in line with the levels we communicated last quarter. That said, the crisis has resulted in a loss of revenue of more than $270 million for the past fiscal year.Turning to our flyer business. In the quarter, we saw a gradual return to pre-pandemic levels from most of our customers. Despite the recent lockdown measures by government to prevent the spread of the virus, our volumes has been resilient so far, but we remain cautious regarding the potential impact of the second wave. As I've said before, direct promotion remains at the heart of retailers' strategies. We know that the flyer continues to drive both in-store and online retail traffic. Based on 2 recent surveys, flyers' leadership remains steady throughout the crisis. This is a clear indication that it's still an effective marketing tool to bring value to retailers while supporting Canadian and household cost savings in these difficult times.In our print segment, a significant portion of our revenues now come from verticals that are growing nicely. Such as premedia, book-printing and in-store marketing. We invested more than $10 million over the past year in our book-printing platform to increase capacity and to improve manufacturing efficiency. This investment signals our confidence in the future of the North American book market. We are well positioned to benefit from this growth. Overall, I'm very proud of our print sector that has generated strong free cash flow and was able to maintain good margins. The fact that we now have about 25% of print revenues and growing segments is another reason why we remain confident in our ability to continue generating strong cash flow for our print sector for many years to come.Our Media Sector is another resilient business. We had an excellent quarter, with a strong growth in profitability year-over-year. This was not only driven by fourth quarter seasonality, but also by innovation and adapting to the pandemic context. We continue to channel our effort into growing these assets, both organically and through future acquisitions.In conclusion, I want to leave you with a few messages. First, our 2020 results reflect the strength of our diversified business model in each of our sectors, combined with a strong execution and agility. Second, in packaging, our main engine of growth, we have successfully completed the integration of Coveris Americas. And we have more than delivered on our synergies. Our foundation is built -- our foundation to build a larger, more profitable packaging company is strong, and we are confident about delivering another solid year in fiscal 2021. Third, while it is too early to provide an outlook for print in the ongoing pandemic context, we expect to see an improvement in volumes, especially in the second half of fiscal 2021 as we cycle past the hardest-hit quarters of fiscal 2020 and move towards a new normal.Fourth, we are confident that our print and media sectors will both continue to provide fuel for our growth by generating significant cash flows in the years to come. Finally, with the strong results we delivered, combined with our solid financial position, we are optimistic about the coming years and remain committed on executing on our growth strategy.With that, I'll turn it over to Donald.
Thank you, François, and good afternoon. I will start by looking at the consolidated numbers. As expected, revenues in the quarter were down year-over-year. Like we saw in the previous quarters, the difference is mainly related to lower printing activities because of the impact of COVID-19 and the sale of the paper packaging business in January 2020. Consolidated adjusted EBITDA for the quarter was up by 5.5% versus last year, mainly from higher margins in the packaging and media sectors. I'll provide more details on how we drove profitability improvement in the review of each sector.Interest expense declined as we reimbursed $375 million of debt earlier in the year, combined with lower interest rates. The tax rate was slightly higher than what we have seen in previous quarters due to the nonrecurring items. Full year tax rate was 25.9%, in line with our guidance. Performance, combined with lower interest expense, led to adjusted net earnings of $0.83 per share for the quarter compared to $0.80 last year.Now looking at the segment. Once again, our Packaging Sector led the way with a very strong quarter. While revenues were lower than last year, mainly because of the sale of the paper packaging operations, we saw strong organic growth in many food-related segments. This includes the introduction of a new product for the banana business in Latin America. This growth was offset by declines in nonfood markets, but we expect those to recover in fiscal 2021. For the full year, excluding the impact of the resin prices and the sale of the paper packaging business, the packaging sector generated positive organic revenue growth of about 0.5%. As we mentioned last quarter, the lag in passing the resin price increases to customers impacted margins in the fourth quarter. Despite this impact, we delivered an adjusted EBITDA margin of 16.9% versus 13.8% last year. The 2 main drivers of this large increase were an improved mix, especially following the sale of the paper packaging operations, and the fact that we exceeded targets for synergies and efficiency gains. In addition, IFRS 16 contributed 60 basis points to the improvement.Our Print Sector also had a strong quarter given the pandemic context. Revenues were down organically, mainly as a result of the pandemic, with a decline of 20%, in line with our outlook. This is a big improvement from the 32% we saw in Q3. In November, volumes were around 80% to 85% of last year, but with a second wave, we remain cautious regarding the next few months.Looking at profitability, the significant reduction in our cost structure and the amounts received from the government, the Canadian Emergency Wage Subsidy program, contributed to an adjusted EBITDA of $75 -- $79.5 million for the sector. On a full year basis, excluding the subsidy, we delivered an adjusted EBITDA margin of 20%. I'm very proud of this achievement as it highlights our ability to align our cost structure in the print sector. I'm also proud that we continue to deliver strong free cash flow in spite of the pandemic impact.Our media business had an excellent fourth quarter, much beyond the expected seasonality. Despite the sale of the specialty media assets towards the end of 2019, profitability increased in the quarter. Looking at the full year, our education books business turned challenge into business opportunities and had its best performance in over 10 years.Turning to cash flow from operating activities. We had a good quarter with $102 million, bringing the full year total to $427 million, in line with 2019. These cash flows, combined with the proceeds from the sale of the paper packaging operations, allowed us to repay $375 million of debt. In addition, we invested $98 million in CapEx, mainly in packaging, which will drive our future growth. We also distributed $78 million in dividends. This reduction in our debt, combined with the higher adjusted EBITDA, contributed to bringing down our net debt ratio to 1.9x. If we were to exclude the impact of IFRS 16, the ratio will be at 1.6x. This is a very significant achievement since we were at 2.5x at the end of last year.Furthermore, at the end of the quarter, we had a total of $674 million of available liquidity. This strong financial position and our ability to generate stable, solid cash flow provide us with flexibility in terms of capital allocation, including capturing growth opportunities. I'm encouraged by the strong results, and I'm optimistic for the future given the strong foundation we have built.Now for our 2021 outlook. In print, as volumes continue to recover, revenues in the second half of 2021 should be higher than those for the same period in 2020. In terms of profitability, excluding the impact of the Canadian Wage Subsidy program, adjusted EBITDA should grow as well for the second half of fiscal 2021. In packaging, excluding the impact of the resin price, we should generate organic growth, especially in the first half of the year. At the EBITDA level, the increases in resin prices we saw in the last 7 months should have a negative impact in the first quarter of 2021. But once again, this impact should be more than offset by efficiency gains, mix and synergies. Once the line effect is over, higher resin prices will increase revenues with no significant negative impact on the EBITDA dollar amount, therefore only impacting margins.Media should have another solid year in 2021, but not enough to offset corporate costs of around $30 million. Assuming no change in interest rates, our financial expenses should continue to decline in line with the reduction in the debt levels. On that note, we reimbursed USD 62.5 million of term loans after the end of Q4. Our effective tax rate should continue to be in the mid-20s range. In terms of the use of cash for the year, you can assume CapEx coming in around $100 million. As for the cash taxes, you can assume around $50 million.On that note, we will now proceed with the question period.
[Foreign Language] [Operator Instructions] [Foreign Language] Your first question will come from the line of Adam Shine of National Bank Financial.
So once again, François, a good result, as you alluded to. Maybe a question or 2 on packaging to start with. Can you -- as you look ahead to fiscal 2021, you've already talked to some of the outlook, but maybe you can talk to some of the moving pieces, pluses or minuses. I think, previously, you've talked about potentially growth maybe in the 2% to 3% sort of organic growth range. So within that 2% to 3% range, if indeed that still holds, does that actually include resin, which I think provides you with a bit of a tailwind in the context of where pricing is going?And then maybe while you're answering that, I'll leave a quick one for your colleague in terms of the organic growth ex resin for the year in packaging was 0.5%. Maybe Donald can just tell us if -- or what the Q4 number was, maybe it's the same, but just one clarity on that. Okay?
Sure. In terms of the organic growth, we're sticking to what we said at the end of Q3. We expect 2021 to be 2%, 3%. We had a tough comp in Q4. And I'm very pleased with the results of Q4. And Donald can share them with you. But having said that, last year, our Q1 was not that good. So we expect to have a good start in organic growth in Q1. And Donald mentioned it in his prepared remarks, we expect to be stronger in organic growth in the first 6 months. Again, the last 6 months have been pretty strong for us, so tougher comps.But when it's all said and done, we believe we will be between the 2%, 3%. We'll be closer to the 3% if the industrial business is coming back, like the part of our portfolio that is affected by -- negatively by COVID. That should help us when it starts to come back in a nicer way. And -- but we believe that the verticals of food that are strong are going to remain strong. And these numbers don't include any resin movement. So obviously, if the resin prices go up, we will do more than 2%, 3%. If resin price goes down, we'll do less. But I believe that we'll be in a position next year to give you the organic growth net of the resin movement. So it's 2%, 3%, we're expecting net, excluding resin price movement. And I will let Donald answer your other question.
Thank you, François. And Adam, for Q4, it was slightly negative, if you exclude resin price.
Okay. And maybe, François, just one other one. You touched on the printing trends being in that 80%, 85% zone, which was pretty much as you had telegraphed back in Q3. Can you speak to any particular movements by customers, I mean, notwithstanding or acknowledging, frankly, some of the restrictive measures that are upon us and maybe brewing as we work through your Q1? Are we still seeing, as you said, resilience in terms of the volumes? And are there any particular moves being made, plus or minus, by any of the customers, key customers?
So before I answer the print, I will complete your answer on packaging to wrap up the year. Like this quarter was negative 0.3%, net of all the resin and all the disposal of assets. But I'm pretty happy that for the overall year, if you exit the paper business and the negative impact it had on us for a couple of months early in the year and you net -- you exit the resin price movement, we finished the year at 0.5% positive. So that's what we had said early on. We were hoping for neutral to plus 1% this year. So we just that -- did just that in packaging. So I'm quite pleased about that.And printing, very similar. We were hoping, to be frank with you, to having this momentum of moving from minus 20% that we were in Q4, and we were at minus 15% in October. So we were hoping to head towards the minus 10%, minus 8% because there's still an impact of COVID. But with the second wave in Canada, with the numbers that we all see every day, I think we're going to stay in the zone where we're at, at minus 20%. And if the virus continued to spread further, we might go back to minus 25% and all that.So from what we had hoped for, Q1 is going to be a little bit less busy than what we had anticipated. The main reason is that a lot of our customers in retail, for example, they're -- for the most part, all of our customers are still using the flyers to communicate with the consumer, but a lot of our customers, especially the nonfood customers, have supply chain issues. They're not even sure how much stuff they will receive from what they have ordered. So it's very dangerous for them to put things in promotion if they cannot fulfill the demand. So that has an impact on us on reduced page count because a lot of our customers are afraid to advertise too much because they're not sure they're going to get the goods.So these are some of the trends that have negative impact on us because of the COVID. Some provinces have -- went down to more serious lockdown. That's certainly an impact on retail. So that's why we remain very cautious for the first 6 months of the year, and you have to remember, Adam, we're going to compare in the first 5 months with non-COVID months last year, and we fully expect November to March this year to be impacted by COVID. After that, it's going to be the other way around, and we believe that things are going to probably get better. And then we're going to compare for the last several months of the year with numbers that were heavily impacted by COVID, minus 50% in April and minus 32% in Q3 and minus 20% in Q4. So we're very -- we're pretty sure that we're going to do a lot better for the rest of the year. But it's going to be slower than what we had hoped for in the next 3 to 5 months, that would be my guess.
[Foreign Language] Your next question will come from the line of Mark Neville of Scotiabank.
I'll echo those comments. A very good quarter. If I could ask, so just the first question, the agreement with Coca-Cola. François, just curious what territory that covers? And I think it's for a sparkling water product, but is there a chance or a possibility that grows to water, a wider sort of product base?
Yes. We both decided to go -- this brand is -- was a new brand for Coca-Cola in sparkling water, a brand called AHA. It's been launched into various parts of the U.S., I think mainly the Southeast. I don't recall all the states, where was the initial launch, but this is a new product. And our innovation that we have brought to Coca-Cola fit well with that brand. And it was -- the volume is obviously a lot less than if we would do that for the cases of 24- and 36-pack of Coca-Cola across the United States. So this -- we both see it as a test. The test has been very successful in terms of the product doing what it's supposed to do and then running very, very well and very, very fast on their line. So no issue there. But obviously, both for us and Coca-Cola, we hope to deploy that product to bigger -- other brands and bigger volume, but we'll do it step by step. And we're innovating and learning together, but it's going very well. And we're quite pleased about how things are going at the moment with this product introduction.
And for the Coke product, are they using recycled packaging now? Or is this sort of the first test, the first trial? I don't know if you can comment on it, but I...
Yes. No, we did the trial in the last -- we've been working on this for 6 to 8 months, and the product was launched about a month ago. So it's commercial. It's in the market. And this brand has been launched with the new product. And this product content -- contained 30% of ocean-bound resin, which is plastic that is picked up near the beaches and near the ocean. And this is the product we manufacture for them. And we have other blends or other innovation that we will probably introduce with them and other customers around the shrink market. So...
Okay. Then I'll -- just a couple of points of clarification. Just on the guidance. So for the print, you're saying, sort of ex Subsidy, to grow, so when that's right, you're around $220 million. That's sort of the adjusted EBITDA for fiscal '20. That's sort of the baseline you're referring to when you're talking about growing next year.
Yes.
Yes. Yes. And if you factor out the Canadian Wage Subsidy, that's the basis. And what we're saying is we -- our call is that we're going to do better than that next year. We're going to grow in the second half of the year, and that's why we think that, both from a sales standpoint and an EBITDA standpoint, that we will do better next year.
Okay. And I guess, in the packaging, it's really, I guess, 2, 2.5 months of the paper and packaging business that you're lapping, and then you sort of grow from there ex resins, right? That's the communication.
Yes. Exactly that. Yes. And it was like 2.5 months. And then if you look at our MD&A, you will have the sales number and the EBITDA contribution, I believe.
Okay. Okay. Maybe just the last one. Just thoughts around M&A. I guess it was a difficult year to do proper diligence, not being able to travel a distance. I'm just sort of curious where you're at and your thoughts around going around that.
I could say that we -- even though we can travel, we were very active in reviewing a lot of files. There's been some transaction in all the space where we operate. But we have the balance sheets to be more active now that we're below 2x at 1.6x, excluding the IFRS. This is how I used to look at it. We believe that we could be more active. Donald mention it on the call. We have about $684 million of liquidity right now.So we think that we have opportunities to do a tuck-in acquisition, both in media and print, to continue to change the portfolio. I mean not a lot of people give a lot of attention to all these small deals, but they're adding up and they're changing the mix of the print sector. So a lot of people think about Transcontinental Printing from -- or what it was 15 years ago. I can tell you it's very different, and it will be very different a year from now, it will be very different 2 years from now.So we -- I mentioned it because when people think about M&A for TC, they only think packaging, but we have a lot of opportunities to grow our media portfolio. That performed quite nicely this year. We have some opportunity to continue to grow in our growth sector and print. And we also have opportunities in North America and South America to continue to do M&A. And packaging needs to be the right fit at the right price, but we just brought in a new leader to help the M&A function, and he'll be working with me. And so yes, it's very much at the heart of our strategy to do M&A in the months and years to come.
[Foreign Language] Your next question will come from the line of Paul Bilenki of TD Securities.
Maybe just following on that last question. And the quarter of the print business that's now coming from growth verticals, what is your sort of growth expectation on an organic basis for those parts of the print business moving forward? What sort of growth trajectory should we expect for those growth verticals in the coming years?
Yes, well, there's 3 parts that represent 25%. There's the POP that we are now close to, $150 million. We made it public that we believe that we have a plan to take it as quickly as we can to $250 million through organic growth that we're enjoying right now. And this organic growth is north of 10%. We're expecting to grow this business double-digit every year with the portfolio of products that we now have because we used to have a certain type of POP business. And then we acquired companies with other types of products and offerings. And now we're offering to our old customer the new products, and we're offering to the new customer our OTC products. So we have a lot more ability to grow organically, and we don't really need to look for the customer. We just have to look at our customer roster and offer a full offering, and it's working.We just picked up a $3 million order with one of our largest customers on stuff that we couldn't do before we bought Artisan and Holland & Crosby. So this part of the portfolio, we expect double-digit organic growth, and we intend to continue to make M&A. We have opportunities to fulfill that vision. So years or months to come, you should expect us to grow from $150 million to $250 million there. So that's a lot of growth if you put in the M&A.In the book segment, we expect single-digit growth. If you want a number, 5% would be the number. And premedia, 5% to 10% is probably possible. Maybe some years, it will be double digits. Some years, it will be closer to 2%, 3% because this business tends to come in a bigger chunk. But again, we are offering new services and -- around creating content for e-commerce and for the web. So this is actually growing quite good with our customers. So this is our expectation. So globally, this 25%, I've not made the calculation. But if you're factoring M&A in there, it's going to be double-digit growth.
That's very helpful. And you've had a number of plant closures recently in your print business, another one underway here in Winnipeg. And a couple of those facilities are company-owned. I'm wondering if you have any plans for asset sales for those facilities that you owned or what you plan to do with those assets.
Yes. It's been happening. If you look how much real estate we sold over the last 10 years, I don't have the number, but it would be impressive. And it goes under the radar screen, but yes, we don't -- we've repurposed some of our building around packaging, like we've put in a packaging plant in the La Presse building, for example. We are doing a lot of synergies, moving 5 POP buildings into our former Brampton plant. But for the most part, we are selling those buildings.And the real estate market is pretty good in Canada. I can tell you that. And I'm often blown away of how much money our plant is worth in the market. And then there's underlying value. And when we look at what TC Printing is printing at, if you just look at the value of the real estate we own in cities like Vancouver, Calgary, Toronto and Montreal, the market value of those assets, those buildings are certainly not priced in our multiple. So yes, once we get rid -- we have to shut down the plant. We will sell -- like the Winnipeg plant is on the market. There's a few more in the market, and then we're selling them, yes.
Okay. Great. Maybe one more for me. You were one of the first signatories of the Ellen MacArthur pledge. I'm wondering if you could provide an update on where you currently stand relative to those targets you had set out and your confidence in achieving those 2025 targets. Just the annual Ellen MacArthur report has been put out. And it looks like there's a lot of work still to be done by most of the industry. So maybe if you could just touch on that a little bit.
Yes. Yes, we've made a few commitments. One of the important ones, it was 2 main ones, one was to make all of the flexible packaging that we produce fully recyclable by 2025. We are making some good progress, obviously, in order to get that done. We will need to invest probably in some new technology, work with our supplier, but we are progressing well. And I'm quite encouraged because us and a lot of our competitors have made some good inroads in the products that I felt was going to be very difficult for us to make recyclable around high-barrier package that have multiple layers of plastic included in there, which make it very difficult to recycle them.But as an industry, I think we came up with a lot of good ideas that are going to be implemented in the years to come. So I feel pretty good about our ability to get that done for 2025. And the other pledge that we made was to incorporate 10% of recycled resin in everything that we do, which means creating a market for plastic waste. So that plastic doesn't become waste, but is reput into the system. And in order to create a circular economy, you need to create a package that will use waste. A good example is like what we talked about earlier at Coca-Cola. Now this package is made 30% with waste. And then if we create -- we move a large chunk of our shrink business, we're going to create a huge market for waste.And then we have a lot of verticals where we are testing and introducing products at the moment in various verticals, our customers, and we're testing them to see if they are having the same runability on their line, the same resistance. And so far, I'm quite pleased by the progress. So I think we will probably surpass this 10% by 2025. That would be my guess.So yes, we are progressing very well as TC. And I must say, as an industry, I mean, we're not alone. Our competitors are also moving in that direction. And our customers are -- want to move in that direction. So I think we're all alike. We have similar goals as an industry. And I think the industry, if we are -- if we have the time and if we work in partnership with various government authorities in North America, I think we could create that circular economy for plastic.
[Foreign Language] Your next question will come from the line of Drew McReynolds, RBC.
First, François, for you, a clarification. When you were going through the 3 drivers of that 25% of printing that is growing, on the premedia side, what was your expected growth rate range? I missed that.
Probably a little bit north of the 5%, between 5% and 10%. And I said that it's not like you usually win a big chunk or a big contract. If customers are moving you, their studio work or their photo work or their e-commerce work, then you tend to pick up a large chunk at the time. So yes, it could be more than that a year, and it's lower than that, but globally, I think we could grow between 5% and 10% in that business on a long-term basis.
Okay. Super. Just shifting to packaging margin. Initially, when I saw the strong quarter here in Q4, I thought maybe some of the resin dynamic that you had communicated last quarter may have gotten shifted into Q1. But it sounds like you got hit, but were certainly able to manage that impact. Is that a better characterization as opposed to kind of shifting this timing-wise into Q1?
Yes. Yes, you're right. We were definitely hit in Q4, as we said at the end of Q3. Remember, we said that we had a strong push in Q3, and we were expected to have, actually, the reverse in Q4, and the amount was important. So that shows that, as I said in my opening remarks, that all the efficiencies, the mix and some of the synergies that we're still capturing were very strong also in Q4.
Okay. Great. And then as we look for packaging margins in fiscal 2020, you had said, for a number of quarters now, 16% to 17% post-IFRS 16 is where you kind of wish to land. If you're able to do maybe a little bit better than that, is that an opportunity for you to make some kind of reinvestment in the business? Are you kind of focused on optimizing margin? Or do you have kind of a pipeline of reinvestment that you could make in the next couple of years?
Well, well, I'll let Donald answer for the margin. But I think I said it last quarter, and I don't think it had changed and we don't want to change that. So we basically said to a question we had that the new normal is 16%, and the new normal is 16%. And that's what we believe we are striving to. Again, net of the resin impact, some quarters could be less, could be more based on the resin, but that's where we feel we're at, which is a year ahead of the target we had set for ourselves when we bought Coveris.In terms of reinvesting in the business, I think Donald said it, this year, we invested $100 million in capital, and most of it went to packaging. And next year, we're investing $100 million, and most of it is going to packaging. So for sure, we are reinvesting in the business. If you look at our sales in Canadian dollar being about 1.3%, that's a high percentage of our revenue being put in new investment. And certainly, when we said earlier that we will grow revenue 2%, 3% organically next year, which is our goal, a lot of that is supported by investment that we've made this year that are going to come online next year. New equipment, new extrusion, new presses, new technology, new products are certainly the backbone of our organic growth story. So yes, we are -- we've been investing, and we will continue to invest. We just talk not too much about it, but it's already the base for our growth in 2021.
And maybe, Drew, to add on François' answers regarding the margins, one thing to consider is that, obviously, resin will -- and we hear right now that there might be some more increases. So obviously, we'll have, as I said, an impact in Q1 on the EBITDA level, but also, we understand that it plays a role also on the margin, even though if we do some pass-through with clients, it will have an impact because it increases in the top line at the same time.And maybe regarding the [ objects ] that we own, -- it's part of our DNA to always work for a better margin. But also, what we have said at the time is that the purview of the plan, we will see margin expansion might come also with organic growth, and this is why we work [ fast ] in -- with a 2% or 3% organic growth as we said earlier. That might be helpful also definitely with the margins.
Yes. Okay. Got it. And one last one for me, maybe for you, Donald. On the government subsidies in terms of the programs kind of that are left here that could benefit you, is there anything that still cycles through here in your fiscal Q1 and maybe potentially into calendar 2021?
Yes. There will be some in Q1, definitely less than what we had in Q4. It's hard for me because there's no -- nothing has been published yet for January 21 regarding the formula, and it's not a steady formula. Since the program that started, it changed over the months, and nothing has been announced so far for January 2021. But we still -- in the last -- in the first 2 months of our first quarter, we will receive some. But I would say, overall, it's probably -- I would say that the max might be around 50% of what we had in Q4. So it's definitely going down.
And great performance this quarter.
[Foreign Language] [Operator Instructions] [Foreign Language] Your next question will come from the line of David McFadgen of Cormark Securities.
I just wanted to ask, I guess, a hypothetical question. Assuming the world recovers from COVID, which hopefully is soon with these vaccines out there in the market now, do you think it's realistic that on the printing side of the business, you would get back to what you did in 2019, which is about $268 million of EBITDA. And I was just wondering if maybe it's going to be higher given all the cost synergies you guys have realized. Any comment on that?
Yes. Well, it's very hard for us to predict the end of the pandemic, and we all think that there will be some economic boom or when people are going to be allowed to go out and to shop and to go to the store freely and do things. We think that, as a country, we will enjoy some economic recovery. Like, for sure, print is heavily tied to this. Is it possible we go back to where we were in '19? And it's possible, but it would need a quick recovery. I mean we -- if the recovery is in August or September, then we will enjoy the recovery for 2 months rather than the year. So we can't go back to what we had in 2019.You have to understand that '19 was a year without any COVID. So it's pretty hard for me to answer your question, and I would not like to answer it because it's hard to predict what's going to be the strength of the economic recovery. What's going to be the new normal for print, it's hard to say. Is everybody going to come back to the level that they were in '19? We know that, in some verticals, like magazines, we don't believe it will be the case. We think that it will be a much smaller industry. Fortunately, for TC, that was not a big part of our business. We think that the newspaper industry will do probably better in the long term than what people think because they are starting to receive some of the support that's been promised to them by various government authorities. So they are starting to benefit from some support. And I think that will help that industry remain in better shape than most people think.And so it's hard to predict. But what we've said and not what I could see for next year is, last year, we did $220 million without any Wage Subsidy impact, and we believe that we are in a position to do better than that. How much then? It depends on the pandemic. After that, what's the new normal? It's very hard for me to sit here and try to make a prognostic about that.
Okay. I think the -- well, I was talking on an annual basis. I was just saying like, hypothetically, assuming you get a full year with getting back to normal. In terms of the CEWS, I think, in the fourth quarter, it was about $14.5 million. I don't think you provided the breakdown in the MD&A between packaging and printing. Could you give us that?
The largest part was in printing, probably 90%. Right?
Yes.
90%. And was it similar, the 90%, for the full year? It must be, right, if you're talking about a baseline EBITDA of $220 million ex CEWS, right?
Yes. We could take that offline. We have all those numbers, but the bulk of the money we receive is for the print sector, yes.
Yes. Okay. Okay. And just on M&A, I mean, I was just wondering, are you looking at any targets now that you could actually act upon? Or it still just too early right now?
We never commented on M&A, where we're at, but what I can tell you is like what I've said before, in the 3 verticals, media, print and packaging, we did look at files in the last couple of months, and there are stuff that we're -- there's always stuff we're working on. If you look at Transcontinental for the past 10 years in terms of buying and selling a company, I think our average number of transactions is probably north of 6 a year. So yes, we will do a movement on our portfolio in 2021, that's for sure. It remains to be seen how many transactions and the size. But for sure, we will do M&A in 2021. But this is something also that is very hard to predict.
[Foreign Language] Mr. Lapointe, there are no further questions at this time.
Thank you, everyone, for joining us on the call today, and we look forward to speaking with you soon.
[Foreign Language] Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.